California is set to implement a significant change in its sales and use tax laws starting January 1, 2027, expanding taxation to electronically delivered software and SaaS. This shift, driven by SB 122, will impact software procurement by increasing the overall cost of technology investments, particularly in a state that leads in AI investment and venture capital. Procurement leaders will need to reassess software demand, contract negotiations, and portfolio management to account for these new tax implications and optimize their spending. AI
IMPACT This tax change will increase the cost of software and AI investments in California, prompting procurement leaders to re-evaluate demand and contract negotiations.
RANK_REASON This item discusses a significant policy change by a major jurisdiction that will impact the economics of technology procurement, particularly for AI investments. [lever_c_demoted from significant: ic=1 ai=0.4]
- California
- California Department of Tax and Fee Administration
- National Venture Capital Association
- Prajkta Waditwar
- SaaS
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